Good job Randy

State Representative Randy Hinshaw (D – 21) plans to introduce a Constitutional Amendment “to prohibit the imposition of an occupational tax in Madison County”.  WVNN’s Dale Jackson wrote about this saying “Kudos to Randy Hinshaw”.  WAAY-TV has the story “Hinshaw Wants to Prevent Jefferson County Problem in North Al”:

Hinshaw says he has the support of the entire Madison County House delegation. If passed by the legislature, the proposal would be put on the ballot as a special amendment in an upcoming election in Madison County.

Once again, Randy is on the right side of an issue, and he’s not only right – he’s a leader.  Disclosure – I like Randy and we went to high school together.

It will be interesting to see how he and the Madison County delegation votes during the special session on the occupational tax for Jefferson County.  It can’t be a good omen for the special session if the Madison County delegation opposes the occupational tax in principle (unless I’m giving them too much credit).  Will Laura Hall vote against the tax?

JeffCo Occupational Tax Special Session

I’m still trying to sort this out – but I already know I don’t like it.   Governor Bob Riley called the Alabama legislature into Special Session this week – it starts Monday August 10.  The special session is to consider re-instating Jefferson County’s currently illegal Occupational Tax.  Gov. Riley wouldn’t have called a special session costing hundreds of thousands of dollars if he wasn’t confident that the legislature would re-instate the tax, probably with ‘accountability’ measures like a County Administrator:

…the tax bill would impose a 0.45 percent occupational tax on the wages of everyone who works in Jefferson County, with no exceptions… The tax rate now is 0.5 percent on many workers, but doctors, lawyers and others who pay license fees to the county or state are exempt from the tax.

A circuit judge in January struck down the occupational tax, ruling it was illegal. The county still is collecting the tax while it appeals the ruling, but the county cannot spend the collected money.

Here is post from the Birmingham Business Law Blog summarizing the situation:

Jefferson County is on the verge of a financial meltdown.  The cause, however, is not the escalating sewer bond debt.  It is the loss of the occupational tax… While (Judge Rains’) opinion allowed the continued collection of the tax, it required the proceeds to be placed in an escrow account.   Jefferson County appealed Judge Rains’ decision to the Alabama Supreme Court as well as petitioned Judge Rains for use of some of the occupational tax funds.  In March, Judge Rains ruled that the county could spend occupational taxes collected through May 18, 2009.  Not coincidentally, that date was the day after the end of the regular legislative session.  Accordingly, the Alabama legislature had to pass a new occupational tax for Jefferson County by the end of the legislative session or the county would be without 26 percent of its general fund resources.  The county projected during the session that the loss of the tax would cause the county to run out of money sometime in August.

An occupational tax is usually like a business license.  This is more like a local income tax you pay for the privilege of working in a certain place, even if you don’t live there.  I hate that – it’s taxation without representation.  Here’s some background:

Counties in Alabama have limited taxing power – only what the Legislature allows.

A law passed in 1967 gave the Jefferson County Commission the right to impose taxes on wages and business licenses.

But commissioners wouldn’t create an occupational tax until two decades later, when the commission was under a federal court order to build a new jail and believed no financial help would come from the Legislature.

The new tax took effect Jan. 1, 1988.

Critics of the tax said it was fundamentally unfair. The 1967 law specifically exempted professionals such as doctors and engineers who already paid a state license fee.

That meant lawyers could avoid the tax but their secretaries couldn’t. Nor could judges. Fortune tellers were exempt; bank tellers weren’t. Private detectives were exempt; police detectives were not.

The issue of who should pay touched off the first flurry of litigation, setting the stage for a brutal political fight.

On Nov. 12, 1998, Circuit Court Judge John Rochester struck down the tax and ordered a new version that applied to all workers.

What a bad law that was.  But then this is what passes for logic in Montgomery from State Representative John Rogers, D-Birmingham):

His bill, Rogers said, is the only one with enough bipartisan support to pass. “Nobody really likes it, so that means it’s probably a good bill,” he said.

The legislature should also consider that if “Nobody really likes it” maybe it’s just a really bad law.

No wonder the occupational tax has been in litigation since it was enacted.  No wonder the tax was overturned in court (but no refunds for taxpayers who’ve been paying an illegal tax for years).  Here’s more background on the Jefferson County Occupational Tax.  And here is what the Birmingham Business Law Blog had to say about the case brought before Judge Rains, with lots of lawyer words and citations.  The Alabama Supreme Court is scheduled to hear arguments about the Occupational tax case starting August 18 (JeffCo appealed Rains’ decision).

Jefferson County really needs the money (that’s what they all say, anyway).  People have gone to jail and many more need to go to jail for public corruption.  The County wasted money and got screwed by their investment bankers.  They’re still building a domed stadium at the BJCC – how much of this crisis is gamesmanship and posturing?

But this is an illegal income tax – only the State can levy an income tax and that rate is set by the Alabama Constitution (currently maxed out by the State, of course).   Since the legislature is meeting in a special session, there is an urgency to do something.  Chances are, what they do will be the wrong thing.

If you want it bad, you get it bad.

Sales tax holiday – JeffCo

The Alabama sales tax holiday cuts the 4% State sales tax on back-to-school items, and many counties choose to cut their sales taxes for the same period.  This program has been a great success, and has resulted in overall sales tax collection INCREASES each year the program has been in place.  This needs repeating – cutting the sales taxes on certain items has resulted in MORE money for the State – because people buy more than just the tax-free items.  The tax-free holiday weekend is now a retailer bonanza, ranking up there with the day after Thanksgiving.

Predictably, this is what happens when Jefferson County decides NOT to offer the tax holiday:  Sales a bit slack at Birmingham-area stores during sales tax holiday.

 Two days into the sales tax holiday, Birmingham area retailers said shopping Saturday was heavy and sales were brisk, though many said the activity was lower than what they saw last year.

The big difference from a year ago was Jefferson County’s decision not to participate. The county’s 2 percent tax is still being collected on all items this weekend because of its financial woes.

How did neighboring counties who cut taxes do?

In Hoover, stores at the Riverchase Galleria in Jefferson County had light traffic early in the day Saturday. But in Hoover’s Inverness area, which is in Shelby County, the Kohl’s store was packed with shoppers… Shoppers at the Target in Bessemer and the Wal-Mart Supercenter in Gardendale said there were noticeably more shoppers there on Saturday than there had been all summer.  

It’s too early to calculate the impact of the sales tax holiday, but just a few weeks ago the Birmingham News reported that the Sales tax holiday is ‘make or break’ time:

“It’s absolutely our biggest weekend,” said Michael Gee, owner of the Pants Store on Third Avenue West, which sells school uniforms. “It’s make or break for us”.

Gee worries about how the recession, plus possible unpaid leave for about 900 Jefferson County employees, could affect sales. He also wants to make sure Jefferson County’s decision not to participate in this year’s tax holiday does not drive shoppers away. So the store will offer a 2 percent discount to offset the county tax.

 That seems like a good plan (and I applaud the store for their creativity – I hope they made lots of money), but it’s too bad that the County government didn’t read the article:

In business volume, the tax-free holiday ranks second only to “Black Friday,” the day after Thanksgiving when retailers traditionally get their biggest boost of the year, according to the Alabama Retail Association.

“It is the Black Friday of summer,” said Brett Berman, manager of the Old Navy store in the Colonial Promenade in Alabaster.

This is my favorite part:

…statewide sales tax collections have increased in the month of August each year since the holiday was enacted.

Collections increased 10.4 percent in 2006, 4.6 percent in 2007 and 7.3 percent in 2008 over the previous Augusts. Comparing sales from August 2005 to August 2008 ($145.5 million in August 2005 and $180.2 million in August 2008) sales went up nearly 24 percent.

“But how much of that we can attribute to the sales tax holiday and how much is general growth, we’re not sure,” said Carla Snellgrove, spokeswoman for the Alabama Department of Revenue. “Looking at collections, it appears that as shoppers are out purchasing tax-exempt items, they are also purchasing taxable items.”

In my opinion the State should be able to differentiate between growth and the sales tax holiday.  And here’s why they should try:  I think the sales tax holiday shows that the State may be able to cut food taxes without losing money overall (the GOP plan).   There is no need to ‘offset’ or pay for the food tax with other taxes (the Dem plan) – it pays for itself with more sales.

Cut the sales tax on food.

Smart Girl Politics

Smart Girl Politics is a social networking site, recently formed to engage conservative women in on-line and real life activism.

I was introduced to the site by one of the organizers of Huntsville’s Tax Day Tea Party (April 15, across from the Clinton Ave. Post Office).  SGP has an Alabama Group composed of some very motivated, and of course Smart, conservative women. 

SGP is also one of the organizing groups behind RootsHQ 2009, to be held September 18 – 19 at Nashville TN.  RootsHQ 2009 is “the first of its kind, center-right new media summit”, which will focus on topics including “Social media, new media technology, internet marketing, search engine optimization, collaborative information movements and NOW media”.

Huntsville Tax Day Tea Party – Signs

Instapundit linked to this Huntsville Times article “Republican Women tout Tax Day Tea Party plans”:

“The goal is to get the message across to our leaders in (Washington) D.C. that we don’t want to be overtaxed or these porkulus bills,” said Glenda Neill, president of the Madison Republican Women’s Club during its Wednesday lunch meeting at the Madison Radisson. “Right now tea parties are planned in 150 cities across the country. Three are planned in Alabama – in Huntsville, Montgomery and Mobile.”

It’s time to start making signs.  Don’t wait until the last minute, like I did with some of my elementary school science projects.  Here are some links to recent Tea Parties displaying the creativity of the protesters.

From Instapundit February 28,2009:

No to American Socialism
Socialism Kills
Pork the Other (Red) Meat
Liberty is All the Stimulus We Need
United States of France
Trickle Up Poverty, and
Foreclose the White House

There were also two signs, one quoting Margaret Thatcher and the other amending a Ronald Reagan line during the 1980 campaign.

The problem with socialism is that eventually you run out of other people’s money.

A recession is when your neighbor loses his job.
A depression is when you lose your job.
Recovery begins when Jimmy (Obama) Carter loses his job.

Obama…Commander and Thief ” was my favorite.

More links to pictures in this Instapundit Roundup from February 27, 2009.

My favorite – the Debt Star:

debtstar

Sales Tax Update

The Huntsville Times article Sales tax hike unlikely in cities provides the following opinions and quotes from public officials (thanks to The Times for getting them on record):

Huntsville Mayor Loretta Spencer has not considered asking the council to approve one.

(Madison) Mayor Sandy Kirkindall said with 57 percent of Madison residents voting against the recently proposed half-cent sales tax, it was clear to him that Madison residents don’t want it.

“I’m not in favor of raising taxes on the people, certainly not with everything going out of sight like gasoline and food prices,” said (Huntsville) Councilwoman Sandra Moon.

(Huntsville) Councilman Bill Kling said the nearly 2-to-1 defeat of the sales tax, coupled with the city’s special tax districts that have provided more than $75 million in recent years for new and renovated city schools, also makes him not inclined to support a sales tax hike.

(Huntsville) Council President Glenn Watson wants to know specifically how city schools would spend the money before committing to a position on a higher city sales tax… he’s more in favor of helping schools with a TIF (tax increment financing) plan than with additional sales taxes.

(Huntsville) Councilman Mark Russell seemed receptive to a sales tax hike for schools, but only if the money is shared for other city needs such as roads and improvements to the Von Braun Center… “I’d like to see the school system make some changes, which they seem to be in the process of doing with consolidating schools and maximizing their resources”.

(Madison) Councilwoman Cynthia McCollum said she believes that for a sales tax increase to work it would have to be a regional effort.  “I think what has perhaps been lacking is that all of us, the County Commission, Huntsville and Madison all need to sit down together and hammer out a solution to this problem and if that solution means a collective sales tax for the entire region then I would support it”.

(Madison) Council President Steve Haraway said based on how Madison residents voted on the issue in the June 3 election that he would not support a city sales tax increase.

(Madison) Councilman Jerry Jennings said he has serious reservations about the consequences of a unilateral sales tax increase…  He said if Huntsville agreed to it, he’d have no problem following suit.

(Madison) Councilman Tim Cowles said he’d rather see a citywide ad valorem increase. “I just don’t think a sales tax increase is a good idea,” Cowles said. “And the reason why is because we can float bonds against ad valorem taxes and if it’s going to be used for infrastructure, really the way to do it is through bonds.” Cowles said regardless, he’d want it to go before the residents for a vote.

(Madison) Councilman Tommy Overcash said he believes after the results of the recent election that “I would really have to look at all the information before making a decision.”  “It hasn’t been asked for yet and I know they’re regrouping and looking at their options and who knows, it could be a countywide push for an ad valorem tax increase…”

(Madison) Councilman Larry Vannoy said he wants to understand more about the financial straits the system is facing before he gets into a sales tax conversation. “I’d like to see what other solutions might be out there and have a public debate on the issue,” Vannoy said. “If the public is going to support it, I think they need to be more informed and be assured that it will fix the problem.”

(Madison) Councilman Bob Wagner said he would only support it if a vote of the people showed they wanted it.  “In the recent election it was overwhelmingly shot down by residents of Madison”.

Madison School Board President Sue Helms said she expects the board will approach city leaders about a city sales tax increase after the Aug. 26 elections. Regardless of what happens, she said the portables that will be needed at Bob Jones High School will be put out front, not hidden behind the school.

Keep in mind that Municipal Elections are coming soon… August 26.

UPDATE:

 The Madison County Record in Commission fends off talk of tax increase gets the Madison County Commission on the record (thank you to the Record):

Commissioner Roger Jones, District 1, said he wanted to put an end to the rumors the commission may pass the tax even though the voters had said no… “The voters voted and they voted overwhelmingly in support of not putting this tax on, almost two to one, and I respect that vote”.

Commissioner Faye Dyer, District 2, agreed she would not vote for a sales tax increase unless the voters of Madison County approved it as well. “The people have spoken”.

Commissioner Bob Harrison, District 6, said he would entertain the idea of a sales tax but he would have to see how it would benefit the people of his district. “The caveat that my district has given to me is that there should be a no vote unless there is something in it for them”.

Commissioner Mo Brooks, District 5, wanted to see if there was any way to lock down the tax so it would not come before the commission again during the next four years…  “If there had been a way for us to do that it would have been important for us to do that so the school boards will know that they need to address their problems with their mayor and their city council’s”.

 

Madison County Board of Education Needs Your Tax Money

The Huntsville Times reports that the ” Madison County Board of Education is meeting Tuesday and Wednesday in a retreat at the Marriott Shoals Hotel in Florence”. “Superintendent Terry Davis has pointed out the already-overcrowded district has $160 million in needs today…”

I guess one of the needs is for the Board to take a two-day meeting in Florence, staying at an “elegant” “spa resort”.  Will the school principals (“seek input from principals”) shlep over to Florence and back or do they get “plush guest rooms” too? More:

Adding to their concerns are cuts in Alabama’s Education Budget for the 2008-09 year. The district already knows it can expect 3 percent less overall from the state program that pays for teachers and other instructional needs. And there will likely be an 8 percent cut in transportation funds.

Madison County Schools held a similar retreat at the same location last year.

Note that the Times URL page is aptly named: “madison_county_school_board_ho”.

The Marriott Shoals Hotel & Spa “invites you to experience a new level of refinement and charm among hotels in Florence, Alabama. Plush guest rooms feature comfortable luxury and modern conveniences, as well as private balconies providing stunning views of the river… Indulge in a lavish treatment at this Alabama spa resort, offering the pinnacle of rejuvenation”.

UPDATE:

John Ehinger of the Huntsville Times says Let’s annex the Marriott Shoals:

For reasons I can’t quite fathom, every time the Madison County or City of Madison school boards go on retreat, they hop in their cars and race to the Marriott Shoals, where for a few days, apparently, they engage in the kind of heart-to-heart dialogue they seem unable to engage in here.

I guess they sit in a circle on folding chairs and wail about how the people just don’t understand. But I don’t know.

In short, they take serious discussions of a serious issue – public education – out of the community they serve. And while the sessions (because of that darned state open-meetings law) are open to the public, how many parents can drop what they’re doing, find supervision for their kids and follow the entourage out of town for a few days?

The latest to frolic at the Shoals Marriott was the Madison County school board and other school officials. Superintendent Terry Davis was careful to note that the money spent was mostly federal money. That means, I assume, that it arrives from Mars every other week by bus and is thus paid by Martians and not by Alabamians or Americans.

I have a lot of respect for Ehinger’s professionalism, and now I’m gaining more respect for his humor as well.  Madison County Schools Superintendent Davis just got schooled; let’s hope he realizes it…

Vote No on the Sales Tax Increase

Madison County Tax Assessor Fran Hamilton wants you to know Madison County Property Tax Facts.

Huntsville pays 27.5 mills school tax (Huntsville City Schools); Madison pays 27 mills school tax and Triana pays 25 mills school tax for their combined school system (Madison City Schools). Rural Madison County, Gurley, OXR, and New Hope pay 16 mills school tax for the Madison County School System

The Madison County Schools are the ones pushing for the sales tax hike.  I don’t doubt that they need more money for County Schools, but if Madison County School Board members need money so badly, they should look to their own property tax rates before raising Huntsville, Madison, and Triana sales taxes. Note that Madison County (5 1/2 %) also pays less in sales tax than Huntsville or Madison or the other municipalities (8%).

Huntsville City Schools don’t appear to need the sales tax money. IIRC about half of the City schools are at 30% – 50% capacity (although Grissom is at 140%).  Huntsville City Schools need to better manage what they’ve got and consolidate / close some underused schools. Note that they’re fixing to think about looking at it.

Madison City Schools may need more money, but they haven’t exhausted other remedies yet. Madison City should get the Legislature to create TIFs to fund their school construction. Plus, they could stop annexing Limestone County land that they can’t support. Planning to build schools in Limestone County with Madison County sales taxes is just wrong.